Stuck(?) - needing new ways to purchase fix/flips

[Lise Friis]

Fixing & selling homes is no sweat (well, unless it's a hot day) in the Denver Metro market. However, finding & funding them is the tricky part. Just finished Flip #4 - sold without putting on market to a party interested in the project. Here, even a lousy property with severe issues sells for more than we want to pay. We found 3 of the Flips just mentioned pre-market by word-of-mouth & still paid a little too much, but the last purchase/sale made up for that. Looking for flip #5, right now and so on. Still trying to pay down debt & get some cash for leverage & quick sales, which seems like it is taking way too long. Would like to buy wholesale, pre-market, auction, etc. but need the almighty cash. So far have used expensive HM loans - 9-12%. The lending firm I'm using promises me a better rate of 8.5% on the next, but it still robs us of a chunk of cash until the project is over. Ideally I'd like to find a LINE of credit of some sort. My credit is excellent, but of course being self-employed must go off my REI history rather than tax returns to borrow. Have 2 holds, and a history of several other successful flips/holds in CA. Any and all suggestions from experienced investors are welcome!

[Jeff Stephens]

Lise:  It sounds like your real estate career is off to a great start...congrats on those four successful deals! I think you are facing a problem that many of us have faced and can relate to. You hit a bit of a ceiling in your ability to do more deals because of the downpayment and hard money factors you mentioned.

I'll give you my honest answer, here. I'm sorry to say it's not a gimmicky "3 simple steps to get the results you want tomorrow"; rather, it's real work and takes commitment.  But ultimately, I strongly believe we all grow a lot more when we avoid the easy shortcuts anyway. :)

To take your game to the next level, I think you need to do 3 things: 

1. Develop your ability to find deals OFF-MARKET (not just pre-market, from wholesalers or at an auction)
2. Develop your ability to find private financing (not hard money)
3. Develop your ability to find and negotiate seller financing

To find deals off-market, you're going to have to do your own marketing to generate leads.  This will likely involve a regimented program of sending letters, physically getting out and spending time in the neighborhoods you want to buy, and networking.  This is work to be sure, but it will be worth it, because you'll end up with deals that nobody else even knows are available--no competition. That's a game changer.

To find private financing, you're going to have to market and hunt for this very proactively too. You'll have to make yourself credible to potential lenders/investors, learn to find those people, and learn how to pitch them. I recently read a good book that I think may answer some of your questions about this.  Check out Susan Lassiter-Lyons book on this, called "Getting the Money." Developing this proficiency will be a game-changer for you as well. 

Last but not least, developing your ability to find and negotiate seller financing is also such a huge advantage.  So many people assuming [incorrectly] that seller financing is what you do when you can't sell your property any other way; so in a hot seller's market like you've got in Denver, it wouldn't be possible.  So. Not. True.  You just have to learn how seller financing benefits sellers so that you can propose it to them in a way that resonates from their perspective.  Major game changer.

Good luck Lise!